A producer plans to add ₹200 worth of goods to her stock by the end of the year. However, due to an unexpected fall in the demand for her goods, she adds ₹250 worth of goods. Her ex-ante investment was ______ and ex-post investment was _______
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → ₹200, ₹250
Ex ante means planned, and ex post means what actually happened.
The producer planned to add ₹200 of goods to her stock, so her ex ante investment was ₹200.
Demand fell unexpectedly and her stock actually rose by ₹250, so her ex post investment was ₹250.
NCERT (2026-27): “4.1 Aggregate Demand and its Components … Consumption may denote not what people have actually consumed in a given year, but what they had planned to consume during the same period. Similarly, investment can mean the amount a producer plans to add to her inventory. It may be different from what she ends up doing. Suppose the producer plans to add Rs 100 worth goods to her stock by the end of the year. Her planned investment is, therefore, Rs 100 in that year. However, due to an unforeseen upsurge of demand for her goods in the market the volume of her sales exceeds what she had planned to sell and, to meet this extra demand, she has to sell goods worth Rs 30 from her stock. Therefore, at the end of the year, her inventory goes up by Rs (100 – 30) = Rs 70 only. Her planned investment is Rs 100 whereas her actual, or ex post, investment is Rs 70 only. We call the planned values of the variables – consumption, investment or output of final goods – their ex ante measures. In simple words, ex-ante depicts what has been planned, and ex-post depicts what has actually happened.…” |